HONG KONG, Aug 10 (Reuters) - A firm owned by Asia’s richest man, Li Ka-shing, won a bid to build a residential and commercial complex above a rail station in Hong Kong in the largest such deal in over a year, paying HK$9.6 billion ($1.24 billion) to subway operator MTR Corp for the site.

Cheung Kong (Holdings), the property developer founded by Li, said on Friday it won the rights for the space above the Tsuen Wan West station, a former market town in Hong Kong’s New Territories that has been swallowed by the city.

“This site is huge,” Simon Lo, the executive director of research and advisory at property brokerage Colliers International said. “I don’t think there are a lot of developers that have the appetite or the resources to snap up a site like this.”

It is the most paid for a site in Hong Kong since a HK$11.65 billion bid in June last year, also won by Cheung Kong, for a lot on the slopes of prestigious Victoria Peak, and surpasses the HK$6.9 billion that Sun Hung Kai Properties paid in July for a Hong Kong island waterfront site.

LAND AND CONSTRUCTION COSTS

The MTR withdrew the original tender for the site in January, when bidders failed to meet its reserve price. Developers have grown cautious on Hong Kong, where land prices are among the highest in the world.

Cheung Kong managing director and executive deputy chairman, Victor Li, the oldest son of the company’s 84-year old founder, said the firm would spend more than HK$20 billion ($2.6 billion) on the project.

MTR said it has a fixed 5 percent profit sharing deal on the back end of the development.

The bid price worked out to an average of HK$4,308 per square foot, the younger Li said, adding that construction costs should take the total figure to more than HK$7,000 per square foot.

Consensus estimates had suggested HK$4,000 to HK$4,500 per square foot.

The elder Li had complained of high construction costs for developers when the company reported earnings last week, forecasting they could rise 30 to 40 percent within the next four years.

But analysts say home builders expect the city’s new leader, Leung Chun-ying, to ramp up land supply, which may curb land prices.

“The developers are now putting in a risk premium,” Lo said. “They can’t afford to offer an expensive bid for any site, because the potential land supply will be higher.”

Cheung Kong reportedly outbid rivals Sun Hung Kai, Sino Land , Henderson Land and Nan Fung Group, as well as a consortium of Wheelock and Co, New World Development and Chinachem.

The site, known as Bayside, has a potential residential floor area of 1.8 million square feet and can accommodate building up to 436,000 square feet of commercial space.

It will have at least 2,384 apartments, the MTR said, half of which must be small apartments of not more than 540 square feet.